Apple has
one of the most popular smartphones on the market with the iPhone. The part
that is so impressive is that Apple has managed to become one of the largest
smartphone makers in the world on the back off relatively few iPhone SKUs whereas
other makers like Nokia have hoards of devices to offer.

Apple is looking to broaden its appeal reports Bloomberg. Bloomberg cites
sources familiar with Apple's plans that claim Apple has a cheaper
and smaller smartphone in the works. The device is said to be about
one-third smaller than the existing iPhone 4. This could well be the long
rumored “iPhone nano”.

The source claims to have seen a prototype of the device last year and notes
that the device was a prototype and Apple often develops prototypes that never
launch. The source also claims that the smartphone has no Home button like the
current iPhone uses and Apple is looking at a sales price of about $200 with no
subsidies and no contract needed from carriers.

That
would make this phone one seriously popular handset on pay-as-you-go networks.

Bloomberg reports that the smaller and cheaper second iPhone model
is a move by Apple to grab more of the market to stave off the growing Android
threat. Analyst Charlie Wolf from Needham & Co. in NYC said, "Instead
of targeting 25 percent of the global mobile-phone market, Apple would be going
after 100 percent."

Apple already owns 32.9% of the smartphone market as of Q4 2010 and a second
phone that sells without a contract at a lower price would make that percentage
grow. The smaller and cheaper handset would also allow Apple to target
countries where consumers buy cheaper devices such as India and China.

"Mac OS X is like living in a farmhouse in the country with no locks, and Windows is living in a house with bars on the windows in the bad part of town." -- Charlie Miller